A Primer to American Debt Made Easy

Bulls 1 Bears 0

As we start 2012, the Exponential Moving Average (EMA) has generated a "bullish signal" (15-week EMA > 40-week EMA).  It generated a "bearish signal" back on August 29, 2011.  Therefore, if you are so inclined, you may want to consider the long-side of the market by purchasing SPY, which is the ETF for the S&P 500.  If you have been long SH, which is the inverse ETF of the S&P 500, you may want to consider moving into a cash position, or, as indicated purchasing the SPY.  The choice is up to you.  Another strategy, if you are long the inverse SH, would be to liquidate 50% of the position this week and see what the close of the market is this Friday, January 20.

In looking at the above chart, the price is still below the long-term bullish support line, which was penetrated in August 2011.  This bullish support line was drawn from the low back in March 2009.  Also, the price is still below the bearish resistance line from the top of August 2011.  Given those two factors, I am inclined to believe that last week's EMA signal could be a false bearish signal.  I will, of course, update this chart on Friday.

Bears Must Act Now!

Unemployment Falls to 8.5%; 200,000 New Jobs Created

The “Nonfarm Payroll (NFP)” number of jobs being created came in at 200,000 on expectations of 155,000. The unemployment rate now stands at 8.5%, which is the lowest since February 2009.  Great news, isn’t it?  Well, not exactly unless you are entering the labor force as a temporary worker with virtually no benefits or job security, very low skill sets, and of course willing to work for the minimum wage.  See, I look at the number of manufacturing jobs being created as the basis for sustainable income growth.  For this month, manufacturing payrolls, which are those high paying jobs where you do need skill sets, rose only 23,000 on an expectation of 155,000.  That number is not good!

Here's the problem, the non-institutional working-age population went from 240.441 million to 240.584, a gain of 143,000 people of working age.  But the number of employed people went down from 141.070 million to 140.681, which is a loss of 389,000.  Adding the two, which is the correct way to measure the employment situation, the economy on a population-adjusted basis lost 532,000 jobs.  And, why is this an important measurement for overall economic health?  Well, it controls the taxing capacity of the government.  That is, more jobs simply means more tax revenues. 

Moral of the story, as usual, is to always look behind the scenes to discover the real truth, which is something the majority of the electorates don’t take the time to do!

Bulltarts: Welcome to 2012

Central bankers of the world have become gods to the Bulltarts; ever-increasing equity prices have become the Manna provided by these gods.    Rising financial asset prices simply demonstrate to those bulltarts that these gods have found favor with the way they are handling the world economies.  They take great pride in believing that their gods have fostered unlimited blessings on them because of their unwavering faith in the powers of the central bankers.  However, the Bulltarts, of course, are blinded to the real truth, which will finally be revealed this year.  They fail to realize that their gods (central bankers) are really anti-Messiahs, who are nothing more than wolfs in sheep clothing.   2012 will finally be the year that reveals this truth.  However, for the Bulltarts, it will be too late once this truth is revealed.  Their false gods that they placed such great and undying faith in will simply devour their financial portfolios. 

2011 Market Performance

 

 

S&P 500 closed the year down 0.04 point at 1257.60, basically unchanged for the year.  The DJIA closed the year up 5.5% at 12217.56.  The NASDAQ closed the year down 1.8%.

For Treasury bonds, the 30-year Treasury bond registered a 35% return, while the benchmark 10-year note gained 17%.

The euro ended 2011 3.3% lower on the year.

The most actively traded gold contract rose 10% on the year, while silver futures ended with a loss of 9.8%.